Supreme Court Rejects Challenge To FCC Broadband Subsidy Program

The Supreme Court ruled Friday that the FCC's Universal Service Fund can continue operating, rejecting claims that the program's funding mechanism violates the Constitution. In a 6-3 decision written by Justice Elena Kagan, the court found that Congress did not exceed its authority when it enacted the 1996 law establishing the fund and that the FCC could delegate administration to a private corporation. The Universal Service Fund subsidizes telecommunications services for low-income consumers, rural health care providers, schools and libraries through fees generally passed on to customers that raise billions of dollars annually.

The program is administered by the Universal Service Administrative Company, a nonprofit the FCC designated to run the fund. Conservative advocacy group Consumers' Research challenged the structure, arguing that 'a private company is taxing Americans in amounts that total billions of dollars every year, under penalty of law, without true governmental accountability.'

The Fifth Circuit Court of Appeals ruled in favor of Consumers' Research, prompting the FCC to petition the Supreme Court for review. Kagan wrote that Congress 'sufficiently guided and constrained the discretion that it lodged with the FCC to implement the universal-service contribution scheme,' adding that the FCC 'retained all decision-making authority within that sphere.' She concluded that 'nothing in those arrangements, either separately or together, violates the Constitution.' The challengers argued the program violates the 'nondelegation doctrine,' a conservative legal theory that says Congress has limited powers to delegate its lawmaking authority to the executive branch.

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